The dreams of crypto enthusiasts inched closer to reality in recent days as lawmakers in Wyoming and Arizona put forward proposals that would allow those states to accept tax payments in the form of digital currencies.
The new proposals, and others like them around the United States, threaten to erode a key distinction upholding the supremacy of the U.S. dollar over its would-be digital competitors: Americans can use U.S. dollars, but not cryptocurrencies, to pay their taxes. Under the Arizona proposal, the state would recognize the most popular cryptocurrency, Bitcoin, as legal tender.
The Wyoming proposal, which is not limited to any specific cryptocurrency, would apply only to sales and use taxes. Both proposals face potential legal and political hurdles. But Wyoming has gone further than any other state in passing laws to accommodate cryptocurrency adoption, and backers of the proposal there believe it will be the first state to take a significant step in the realm of tax payments.
Both proposals face potential legal and political hurdles. But Wyoming has gone further than any other state in passing laws to accommodate cryptocurrency adoption, and backers of the proposal there believe it will be the first state to take a significant step in the realm of tax payments.
The Wyoming effort also offers a window into some of the forces vying to shape the future of digital money: namely, big retailers and veterans of the commercial banking industry.
“We are looking for alternative currencies to compete with the U.S. dollar,” said Zhou Xiaomeng of American CryptoFed, a group backing the Wyoming proposal. American CryptoFed, whose founders previously worked on mobile banking platforms, plans to issue a so-called algorithmic stablecoin — a cryptocurrency whose value is pegged to the consumer price index — that can be collected for sales tax purposes.
